This study examines the impact of debt on domestic and foreign investment in both G7 and ASEAN countries
(The Association of Southeast Asian Nations, known simply as ASEAN, is a political and economic union between 10 member states in Southeast Asia, with the aim of strengthening intergovernmental cooperation and facilitating economic, political, security, military, educational, social and cultural integration between its members and countries in the Asia-Pacific region.)
over a period spanning from 1995 to 2015. Our analysis reveals that debt accumulation has a notably adverse effect on the economies of ASEAN countries. Conversely, in G7 countries, the relationship between debt and investment appears to be influenced by other macroeconomic factors. The research further indicates that increased public spending and enhancements in institutional quality tend to foster an environment conducive to both foreign and domestic investment across the G7 and ASEAN regions. The findings of this paper, documented by prior empirical studies, underline that the influence of debt on economic indicators is dependent upon various factors, including the ‘debt threshold', ‘debt allocation', ‘governance', and the dynamics of ‘crowding in' versus ‘crowding out' effects.